Chapter 21

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Author:
Ruth5151
ID:
19848
Filename:
Chapter 21
Updated:
2010-05-18 23:03:56
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Economics Mankiw
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Description:
A.P. Economics textbook, Chapter 21 vocabulary
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  1. budget constraint
    the limit on the consumption bundles that a consumer can afford
  2. indifference curve
    a curve that shows consumption bundles that give the consumer the same level of satisfaction
  3. marginal rate of substitution
    the rate at which a consumer is willing to trade one good for another
  4. perfect substitutes
    two goods with straight-line indifference curves
  5. perfect complements
    two goods with right-angle indifference curves
  6. income effect
    the change in consumption that results when a price change moves the consumer to a higher or lower indifference curve
  7. substitution effect
    the change in consumption that results when a price change moves the consumer along a given indifference curve to a point with a new marginal rate of substitution
  8. Giffen good
    a good for which an increase in the price raises the quantity demanded

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